FAQ

What is the Global Energy Perspective (GEP)?

GEP is a detailed granular model which captures the global energy landscape, covering 145 countries, 28 sub-sectors, and 55 fuels. Our perspective helps clients across sectors and geographies understand which key forces and disruptions are likely to impact the energy markets as well as the key drivers behind them and their interdependencies.

What makes GEP distinctive?

The GEP model captures the breadth and depth of our global network of McKinsey experts in the key sectors which allows us to establish an objective bottom-up fact base of key trends and derive a global and holistic perspective. The model is flexible, enabling you to adjust scenarios based on a variety of assumptions to fully understand how different scenarios can lead to different results. We not only provide insights on what the implications of different scenarios would mean for our clients but we also create transparency on the drivers behind them and how we think these drivers will develop. In this way, our clients know what signposts to look out for and which scenario is more or less likely to happen.

What was most difficult?

One of our greatest challenges is to capture the fast-changing dynamic of the energy market. Moreover, it’s tough to build a model of the world’s energy demand and arrive at one conclusion. If you consider demand worldwide in all sectors, you need to understand the behavior of different individuals as well as those of institutions and the other players involved.

Another challenge was the management of our network: we needed to find the right core team members who could cover the relevant sectors and geographies and also harness the knowledge of hundreds of industry experts.

What are you most proud of?

The collaboration across McKinsey and McKinsey Energy Insights which enables us to create a distinctive and flexible view on the energy transition. This is made possible by the input of content experts across the globe and the work of our dedicated team, who aggregate all that knowledge into one unique perspective. We’re also proud of is the granularity of our outlook – we accumulate more than 6 million data points across countries/sectors/fuels.

How can GEP help me?

For our clients in the energy sector, automotive industry, governments, and financial institutions, we help you navigate the energy transition in two ways. The first is our traditional advisory model with consulting teams using our GEP to help you get a deeper, more complex view on the implications of the transition. The second is asset-based, in which our clients use a web app to access the GEP directly, interact with the tool, change the assumptions, and model their own scenarios on how the energy system will evolve and what it means for them.

What are your main assumptions?

We have hundreds of assumptions feeding into the model, both economic and technical, such as the cost of solar development in China or the wind speed in the UK. More fundamental assumptions include population growth and economic development across different countries where we rely on the perspectives of institutions such as the UN and our own economic think tank, the McKinsey Global Institute.

What are the priorities in further developing this?

As the energy landscape continuously evolves, we are further innovating the GEP model by going deeper into each sector and becoming more interactive with our clients to help fine-tune our model through developing holistic scenarios based on their assumptions. For example, we take into account disruptors such as the impact of higher penetration of electric vehicles on energy consumption, the increasing cost competitiveness of renewables, or the latest government policies. We are also developing our web app into a tool our clients can use in their strategy and annual planning processes.

What is the methodology?

For each sector, we have specific methodologies to link the many outputs into one comprehensive outlook and continuously refine these methodologies as new information or trends emerge. In these methodologies, we combine rigorous economic and statistical analysis with cutting-edge thinking from industry and functional experts, drawing on the latest information from both our own network and global institutions.

To reflect the differences in local conditions, which help to understand how the transition will unfold, we take a very local approach for the countries, sectors, and fuels and model them bottom-up. Next, we aggregate these many local and detailed perspectives, in order to derive regional and global results and implications. In this way, we ensure that GEP is a holistic perspective on the global energy transition.

How accurate are your projections?

Our Global Energy Perspective brings together the views and expertise of hundreds of experts with whom we work. Their views do not always perfectly align, so through our reference case, we provide a consensus view on the most likely path forward for the world’s energy systems. Through scenarios and sensitivity analyses, we offer a perspective on how different ongoing assumptions will affect the outlook, at the micro and macro level.

As part of our work, we also have extensive quality control processes to review all the outputs and reconcile them both top-down and bottom-up to ensure we achieve the highest levels of accuracy.

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